US Bancorp Announces Resolution Finalizing Legacy BSA / AML Matters

US Bancorp Announces Resolution Finalizing Legacy BSA / AML Matters”

U.S. Bancorp failed to monitor suspicious transactions and other activities that should have raised money laundering alerts, and then its employees tried to hide the deficiencies from regulators, federal prosecutors in NY said Thursday.

The U.S. Justice Department said US Bancorp's inadequate safeguards against money laundering led the bank to miss suspicious transactions for a five-year period from 2009-2014.

The U.S. Attorney, Geoffrey Berman, said the bank's poor controls had allowed a former customer, race-car driver Scott Tucker, to launder money from an illegal payday-lending scheme.

"The bank had systemic deficiencies in its transaction monitoring systems, which resulted in monitoring gaps and a significant amount of unreported suspicious activity", said the OCC in a statement.

The company will forfeit $528 million in profits and pay fines to three federal agencies: $15 million to the Federal Reserve Board, $75 million to the Office of the Comptroller of the Currency (OCC) and $185 million to the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

"Our culture of ethics and integrity demands that we do better".

Tucker's business "maintained certain deposit accounts with U.S. Bank National Association", the company reported. "As a result, U.S. Bank failed to detect and investigate large numbers of suspicious transactions".

But senior bank officials knew they should not be curtailing money-laundering inquiries just because they did not have enough employees, so they hid the practice from federal bank examiners, according to prosecutors. The banks Anti-Money Laundering Officer says the program is an effort to "use "smoke and mirrors" to 'pull the wool over the eyes, '" of one regulatory agency.

"The bank operated the program "on the cheap" by restricting head count and other compliance resources, and then imposed hard caps on the number of transactions subject to AML review in order to create the appearance that the program was operating properly", he said. Bank employees failed to fill out reports appropriately, impeding the ability for law enforcement to do their jobs.

US Bank continued to open new Tucker accounts and did not file a suspicious activity report even after learning of a Federal Trade Commission lawsuit against his businesses, doing so only after being served with a federal subpoena, prosecutors said. Tucker's payday loan operations "exploited over four and a half million working people ... struggling to pay living expenses", the indictment charged.

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